Array Modifier Rotation Problem
There are two issues here:


The duplicated cylinder is not the same size and orientation as the original. This is because you have not applied the scale and rotation on the first cylinder. 
Your cylinders are not being duplicated around a circular path because the origin point of the cylinder should be where the empty is. Snap the cursor to the empty and then select the cylinder and click Object>Transform>Origin to 3D Cursor. Then once you rotate the empty on the Y axis you'll get the circular duplication you want.